Fonterra has waived a ban on staff trading units in its new Shareholders Fund after a rush to sell into the soaring market post listing.
In an email sent on Thursday, Fonterra chief financial officer Jonathan Mason told staff the company's securities trading policy prohibited buying and selling within six months.
However, the policy was being waived until December 20 "because [Trading Among Farmers] is new so that staff may not have been aware of the policy requirement not to engage in short-term trading, and because staff, when applying for units, may not have expected that they would receive their full allocation, which may have created financial hardship."
More than 1300 Fonterra staff bought units in the Shareholders Fund at $5.50 each through the Friends of Fonterra offer. It appears the Friends were the only investors to receive as much stock as they asked for.
Other buyers - institutions and clients of broking firms - are understood to have had their allocations drastically scaled back to 10 per cent or less of the quantity requested.
Trading in the stock opened on the NZX at $6.66 on November 30 and the price quickly rose to $6.90, delivering a windfall to short-term sellers.
The temporary waiver on short-term trading applies only to staff who don't have access to material inside information.
In the email, Mason said the ban on short-term trading was intended to discourage speculative trading by staff. It was put in place when the board approved Trading Among Farmers, which changed the co-operative's capital structure and introduced the Fonterra Shareholders Fund.
The fund units were trading at $6.65 late yesterday.
- © Fairfax NZ News
Do you agree with Meat Industry Excellence chairman John McCarthy's views that it is not in the national interest to turn New Zealand into a giant dairy farm?Related story: Sheep, beef concerns over dairying squeeze